-Bill auction in its 100 year old T-Bill history, by offering to sell Rs 180 billion worth of T-Bills by an auction){kind=link}
Cash strapped Sri Lanka will be holding its largest ever weekly Treasury (T)-Bill auction in its 100 year old T-Bill history, by offering to sell Rs 180 billion worth of T-Bills by an auction on Wednesday (17 May), data on Central Bank of Sri Lanka’s (CBSL’s) website today (Friday (12 May)) showed. The previous largest T-Bill auction was for the sale of Rs 160 billion worth of T-Bills which was held nine days ago on 3 May.
With Government of Sri Lanka’s (GoSL’s) T-Bond debt subjected to debt restructuring (forced debt reduction), CBSL, the steward of GoSL debt, is resorting to selling short-term T-Bill maturities to repay long term maturing T-Bond debt.
Meanwhile, the splits of Wednesday’s T Bill auction are Rs 90 billion worth of 91-day T-Bill maturities and Rs 45 billion each of 182 and 364-day maturities, respectively. Such Huge GoSL borrowing will result in upward pressure on rates at the expense of lending to the private sector, the engine of growth.
Normally, investments in T- Bills and T-Bonds are risk free because in the event GoSL is unable to repay such debt, generally, CBSL is usually mandated print demand-pull inflationary money and repay such creditors. Money printing is the sold prerogative of the CBSL. Selling T Bills and T Bonds to the domestic market is a popular way GoSL raises money to meet its domestic needs.